No disagreement here. I own a significant number of shares. My bullish case is as follows:
1. Per private placement PR, their 200,000 kg capacity is fully contracted for fiscal 2020 and fiscal 2021. That is prior to their expansion via Phase IIIA and the SugarLeaf acquisition (expected to be 1,500,000 kg in Canada and 1,500,000 kg in U.S. by end of year).
2. As far as I can tell, maximum planned capacity is 7,500,000 kg. That is the 3,000,000 kg aforementioned along with the remaining approved 4,500,000 kg expansion for Phase IIIB in Canada.
3. Management recently stated that these two facilities could support revenues in excess of $450m at 50% capacity. They did not provide inputs / variables but my assumption is that is using the full planned capacity amount of 7,500,000 kg, meaning 3,750,000 kg extracted would equate to $450m in revenue. Taking this ratio, that implies minimum revenue of $24m annually for fiscal 2020 and 2021 based on 200,000 kg contracted. That would assume SugarLeaf has no existing sales and they cannot sell their excess capacity. However, it’s easy to see how something like $100m in revenue based on their capacity by end of year is easily achievable. In MediPharm’s most recent earnings call they mentioned there is no shortage of customers and that their phone is ringing off the hook; I expect the same is/will be true for Neptune once the capacity is online.
4. New CEO has significant ties to Unilever and specifically Schmidt’s Naturals (a Unilever brand) that just launched a hemp-derived product line. CEO tweeted about that launch, and the PR yesterday just happens to mention that one of the new customer relationships is a large nutraceuticals company in the U.S. which gives me reason to speculate we could be the supplier for this product line. Ben & Jerry’s is also a Unilever brand and they have announced they plan to have a line of CBD ice cream once FDA / the legal climate is settled. That could be another potential large scale customer for Neptune given the existing ties and our large capacity. To put it in perspective, MediPharm has only about 250 - 300k in capacity and they are making money hand over fist. We will blow them out of the water in terms of available capacity.
I could go on, but I will leave it at that. I usually don’t provide my DD to this degree but this board is dead and the stock is low volume enough that nobody is paying attention to how undervalued this is.
